One begins to wonder just how long the housing market can work in the favor of sellers. Low inventory continues to create a competitive situation for buyers that has sales prices meeting asking prices and often going over for well-priced homes that show well. As long as buyers continue to form new households and feel financially confident within an inviting economy, this could be the state of residential real estate for quite some time.

From colder-than-average temperatures to a record-breaking snow storm, this spring has been anything but normal. While those searching for homes have seen more options since January or February, they’re still seeing fewer options compared to last year. That’s capped sales activity—particularly at the entry-level prices—and the lack of inventory combined with rising prices is encouraging some sellers to hold onto their properties.

In March, sellers listed 17.5 percent fewer homes on the market—the fifth consecutive month of declines compared to a year ago. Largely due to the shortage, closed sales declined 10.3 percent compared to the year prior. For-sale housing inventory was 26.1 percent lower than March 2017, the largest decline in over a year. This shortage has created a competitive environment where multiple offers and homes selling for over list price have become more common.

Sellers are receiving strong offers close to their original list price quickly, which can sometimes frustrate home buyers. New construction closed sales rose 13.1 percent compared to last March. Although single family homes made up about 74.0 percent of all sales, townhomes have enjoyed more resilient demand lately. Similarly, previously-owned homes made up about 89.0 percent of sales but new construction showed a much stronger increase in pending and closed purchase activity.
“We’re seeing some early evidence that the seller’s market could be starting to shift toward a balanced market,” said Kath Hammerseng, President of the Minneapolis Area Association of REALTORS® (MAAR), “When it comes to the long-term health of the housing market, that’s very much a good thing.”

“Prices continue to rise while market times remain brisk,” said Todd Urbanski, President-Elect of MAAR. “This spring market is shaping to be more buyer-friendly than last year, it’s still a great time to get properties listed.”

Treasury yields rose ahead of the release of the Fed’s Beige Book and speeches from New York Fed President William Dudley and Fed Governor Randal Quarles. Following Treasurys, mortgage rates soared. The U.S. weekly average 30-year fixed mortgage rate rose 5 basis points to 4.47 percent in this week’s survey, its highest level since January of 2014 and the largest weekly increase since February of this year.

The spring of 2018 has exhibited weather patterns that many will not soon forget. Professional baseball games are getting canceled due to snow, vacations are being delayed by grounded flights and the usual rush that takes place in the housing market when the names of months get shorter is maintaining a more even pace. Given continued heightened buyer demand brought on by more household formations and higher wages, temperance may well be a good thing for market health.

Mortgage rates have been holding steady over the past two months. The U.S. weekly average 30-year fixed mortgage rate was 4.42 percent in this week’s survey. Rates have bounced around 4.4 percent since mid-February. Rates could break out and head higher if inflation continues to firm.